News

Takeover Rumors Send Delia’s (DLIA) Stock Soaring

The teenage girl-targeted mall clothing chain Delia’s (DLIA) saw shares jump more than 35 percent at one point after receiving several unspecified takeover offers. While details on any deal remain vague, any massive change in leadership for this troubled company in a troubled industry is being welcomed by the market.

Delia’s has struggled alongside most mall retailers, as more and more shoppers migrate online, and the brick-and-mortar stalwarts like Delia’s struggle to adapt. While this is not to say Delia’s online presence is non-existent; it is limited, especially compared to behemoths like Amazon (AMZN) .

Delia’s is much like comparable niche retailers who saw business boom in the 90s, only to watch that business evaporate as mall shopping culture continued to go the way of the dodo. Compatriots like Abercrombie and Fitch (ANF) have likewise struggled, as numbers continue to stagnate while their online-focused brethren surge. But Delia’s is perhaps the worst of the lot: their Q1 earnings report showed an astounding comparable store sales drop-off of 23.8 percent.

A&F does not find themselves in nearly the same situation as Delia’s, whose stock has languished well under a dollar a share for most of 2014. Internal turnaround efforts have so far failed to right the ship, and the company risked going insolvent unless a drastic change was to take place.

What change? That has, and continues to so far be, unclear. But in many cases, the market responds enthusiastically to any change in leadership, like the mere mention that former Microsoft CEO Steve Ballmer was stepping down that sent shares of the tech giant soaring.

In tis case, it’s the mere fact that somebody, no matter who, is going to take the Delia’s brand and do something with it besides lose money. Delia’s has been scrambling, replacing their CFO in June in a bid to mitigate their rapid decline and possible delistment from the NYSE.

The plans for Delia’s remain murky. Even if a buyout will indeed take place is far from certain. But the possibility of any change to stop the plunging of a stock that has lost 72 percent of its value in 2014 look to be more than enough to get investors excited, or at least to believe that Delia’s isn’t completely down yet.

DISCLOSURE:
The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer